Tour operator's collapse decimates scheme established to compensate holiday-makers

The scheme established to compensate holiday-goers when service providers go bust has less than half the funding on hand that was required to cover the collapse of a tour operator two years ago.

Tour operator's collapse decimates scheme established to compensate holiday-makers

The scheme established to compensate holiday-goers when service providers go bust has less than half the funding on hand that was required to cover the collapse of a tour operator two years ago.

Officials at two Government departments have remained tight-lipped as to what plans - if any - are in place to compensate customers should another large travel agent go bust and exhaust the funding in place to protect international travellers.

The 2017 accounts for the Travellers’ Protection Fund were submitted to the Dáil recently, and they showed that its finances took a hit of almost €3.5m - or nearly 70% of the entire fund - in 2016.

This was almost entirely down to the collapse of lowcostholidays, which saw holiday-goers claim €3.3m in compensation for canceled vacations, with another €300,000 spent by the Fund on the cost of administering the payouts.

The fund is financed by payments from the travel industry and administered by the Commission for Aviation Regulation (CAR), which is responsible for the licencing of the travel trade.

The CAR submitted the fund’s 2017 accounts to the Dáil last month. It revealed that the balance available in the fund at the end of December 31, 2017 was €1,586,480 - less than half of what was needed to pay lowcostholidays customers when it went out of business.

The Irish Examiner asked the CAR, the Department of Transport, Tourism and Sport (DTTAS), and the Department of Public Expenditure and Reform (DPER) what would happen if another large operator were to collapse and spark claims that would exceed the amount remaining in the Travellers’ Protection Fund.

A spokesperson for CAR pointed to legislation which states that in such an event, customers would be paid a proportionate sum based on the cost of their holiday - but not the whole amount.

We asked both DPER and DTTAS if the Government would consider reimbursing the fund if it were the case that holidaymakers were to lose out.

A DTTAS spokesperson replied: “The monies of the fund are managed by the Department of Public Expenditure and Reform, any proposals to reimburse the fund would be subject to the approval of the Minister for Finance."

However, DTTAS would not say if it has a policy in place to seek such an approval to pay into the fund. DPER said it legally cannot pay into the fund, but can only approve such a proposal from DTTAS should it arise.

“The monies of the fund are managed by the Department of Public Expenditure and Reform, any proposals to reimburse the fund would be developed by CAR and DTTAS and would also be subject to the approval of the Minister for PER under the relevant legislation.

"There is no legal mechanism at present for DPER to contribute to the TPF under the relevant legislation, the Transport (Tour Operators and Travel Agents) Act 1982. Such a provision may be considered by CAR and DTTAS in the context of new policy developments."

Both Departments said DTTAS and CAR “are cognisant of the need to bring forward new travel consumer protection measures in light of a number of factors”.

“The CAR has conducted extensive consultations on both the requirements of the 2nd EU Package Travel Directive and also the future of travel trade bonding and the TPF. The DTTAS and CAR are collaborating on the development of policy options to underpin an efficient travel trade sector and to ensure that consumers continue to be protected into the future,” they said.

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